Company to host conference call at 11:00 am ET on Monday March 28, 2016

LOS ANGELES, March 28, 2016 (GLOBE NEWSWIRE) -- Nova LifeStyle, Inc. (NASDAQ:NVFY), a U.S. based fast-growing, innovative designer, manufacturer and distributor of modern LifeStyle furniture, today announced financial results for the fourth quarter and twelve months ended December 31, 2015.

Fourth Quarter and Full Year 2015 Financial Highlights:

• For the twelve-month period ended December 31, 2015, Net Sales were $108.8 million, an increase of 10.3% compared to the prior year period.  Sales growth was driven primarily by a 11% increase in sales volume along with a 2% decrease in average selling prices.
• Fourth quarter Net Sales were $28.6 million compared to $29.0 in the prior year period.
• For the full year 2015, gross profit was $18.4 million, a decrease of 5.2% versus the prior year period.  Gross profit for the fourth quarter was $4.8 million, a decrease of 8.0% from the prior year period.      
• Fourth quarter Gross Margin was 15%, compared to 23% in the prior year period while full year 2015 Gross Margin was 16.9%, compared to 19.6% in the prior year period.  Fourth quarter sales mix was more heavily weighted to lower price products which also yield lower margins for the Company.
• Gross Profit and Gross Margin both also declined due to increased costs associated with products purchased from third parties.  In addition, Nova LifeStyle reduced selling prices on certain items sold to a limited number of large accounts during 2015, which the Company believes will ultimately benefit its growth in the future while allowing it to sell additional product into core accounts while eventually gaining margin expansion as it reaches critical mass with those customers.
• Net Income was $0.7 million, or $0.03 per diluted share based on 22.8 million shares outstanding in the fourth quarter of 2015, compared to net income of $1.8 million or $0.09 per diluted share based on 20.4 million shares outstanding in the prior year period. 
• For the full year 2015, Net Income was $2.2 million, or $0.10 per diluted share based on 22.8 million shares outstanding, compared to net income of $8.5 million or $0.42 per diluted share based on 20.4 million shares outstanding in the prior year period.
  
  

Management Commentary
Jeffrey Wong, Chief Executive Officer of Nova LifeStyle, stated, "Our 2015 results were highlighted by top line growth of 10% year over year, largely driven by our continued expansion in North America and China.  North American sales increased 17% during the period, showing that our expanded marketing efforts to the U.S. and Canadian markets are bearing fruit.  This also compares very favorably with North American industry growth of 3.8% last year.¹  In China we grew our sales 11% as our relationship with IKEA continues to expand.  In addition, we expect recently-announced partnerships, such as Vanke, one of the leading real estate developers in China, to help drive continued sales growth in 2016 and beyond.  Although European sales were relatively flat year over year we continue to believe that customers in those markets have an appetite for our new modern home furnishing solutions that encapsulate a changing contemporary lifestyle.  As those economies begin to rebound we expect to see increased sales activity.”

Mr. Wong continued, “Last quarter we noted that our cost of goods was elevated due to increased seasonal orders fulfilled using third party manufacturers and this dynamic persisted in the fourth quarter.  We feel it is vital to make sure we provide our customers with the highest quality products in a timely manner.  In order to maintain this level of service, we are sometimes forced to absorb higher third party costs.  Over the long run we are confident that this strategy cements our relationship with our clients and is the right course of action.  We are working to expand our supplier base which we feel will lead to more stability in our supply chain moving forward.  Additionally, as we pursue large, “national account sized” customers, we may choose to offer some flexibility on price in order to gain new customers.  During the fourth quarter we made a small number of such concessions which we believe will benefit our business in the long run.”

Ms. Tawny Lam, President of Nova LifeStyle, stated, “2015 featured a number of highlights for Nova LifeStyle.  We participated in several of the leading industry trade shows, such as the Las Vegas Market events along with the High Point Market.  We continued to expand our online commerce presence and announced new partnerships with leading firms such as Vanke and I-Kongjian.  An additional highlight of the year was that Nova LifeStyle won the Outstanding Import & Export Enterprise Award from The Hong Kong Chinese Importers’ & Exporters’ Association (“HKCIEA” or the “Association”) on September 14, 2015 following the Company’s participation at The 36th Edition of the China International Furniture Fair (Shanghai), from September 8-12, 2015.  In closing, I would like to thank all of our shareholders for their trust in our company and I would also like to thank all of our employees for their hard work and dedication.”

¹ https://ycharts.com/indicators/us_furniture_and_home_furnishings_store_sales

Operational Overview

Product Category
Nova LifeStyle’s largest selling product categories in the twelve months ended December 31, 2015 and 2014 were sofas, cabinets and dining tables, which accounted for approximately 30%, 15% and 16% of sales, respectively, for the twelve months ended December 31, 2015, versus 34%,16% and 16% of sales in the prior year period.

In order to drive growth, the Company is focused on the adoption of new image standards along with continued expansion of  its product lines.  The Company intends to enrich its product lines to include a bedroom series, which would include beds, bed side tables, mattresses (which could be imported or purchased in China) and bedding sets including bed sheets, pillowcases, quilt covers, and other items (which can be purchased within China).

Geographic Breakdown

North America
Sales to North America were $75.2 million in the twelve months ended December 31, 2015, an increase of 17% from $64.4 million in the same period of 2014, driven by a continuation of our increased marketing efforts in the U.S. markets.  As a percentage of total revenue, North American sales remain the largest for Nova LifeStyle at 69%.

China
In China, overall sales increased by 11% to $19.0 million in the twelve months ended December 31, 2015, as compared to $17.0 million in the same period of 2014, driven by increased sales from our subsidiary, Ding Nuo, to IKEA.

Europe  
Sales to Europe were $10.6 million in the twelve months ended December 31, 2015, a decrease of 7% from $11.4 million in the same period of 2014 as a result of the continued softness in European economies.

Geographical distribution of sales is set out as follows:

Notable Achievements and Highlights During 2015

• January 2015: Presented at the Winter 2015 Las Vegas Market trade show.  The Las Vegas Market is an international furnishings showcase that combines style, inspiration and productivity in an unrivaled, world-class destination.
   
• April 2015: Announced the successful development of a new, health-oriented, product line called Smart Health Furniture, that offers the ability to monitor, record and deliver user data to key medical care providers.
   
• June 2015: Launched First-of-Its-Kind "Last Mile" Furniture Delivery and Installation Service called ezHome.
   
• August 2015: Presented at the Summer 2015 Las Vegas Market trade show.  The Las Vegas Market is an international furnishings showcase that combines style, inspiration and productivity in an unrivaled, world-class destination.
   
• September 2015: Won the Outstanding Import & Export Enterprise Award from The Hong Kong Chinese Importers’ & Exporters’ Association (“HKCIEA” or the “Association”) on September 14, 2015 following the Company’s participation at The 36th Edition of the China International Furniture Fair (Shanghai), from September 8-12, 2015.
   
• October 2015: Participated in the High Point Market trade show in High Point, NC.  The High Point Market is the largest furnishings industry trade show in the world, bringing more than 75,000 people every six months.
   
• December 2015: Signed a strategic alliance agreement with (China) Shanxi Wanqing Senior Care Service, Group (“Shanxi Wanqing”), a senior care service, senior care home and hotel development company, to operate as its exclusive supplier for furniture design and manufacturing. 

Balance Sheet and Cash Flow Highlights

• Cash and cash equivalents were $1.0 million at December 31, 2015, as compared to $1.2 million as of December 31, 2014. 
• Working capital at December 31, 2015 was $48.6 million, as compared to $34.5 million at December 31, 2014.
  
  

The following is a summary of cash provided by or used in each of the indicated types of activities during the twelve months ended December 31, 2015 and 2014:

Net cash used in operating activities was $4.2 million in the twelve months ended December 30, 2015, a decrease of cash outflow of $2.3 million from $6.5 million of cash used in operating activities in the same period of 2014.

Webcast
To listen to the live webcast, please go to www.NovaLifeStyle.com and click on the conference call link, or click: Nova Lifestyle Fourth Quarter and Full Year 2015 Webcast.  This webcast will be archived and accessible through the Company’s website for approximately 30 days following the call.

About Nova LifeStyle
Nova LifeStyle, Inc., a NASDAQ Global Markets Exchange listed company headquartered in California, is a fast growing, innovative designer, manufacturer and distributor of modern LifeStyle furniture; primarily sofas, dining rooms, cabinets, office furniture and related components, bedrooms, and various accessories in matching collections. Nova's products are made in the US, Europe, and Asia and include LifeStyle brands such as Diamond Sofa, Colorful World, Giorgio Mobili, Nova QwiK, and Bright Swallow International. Nova's products feature urban contemporary styles that integrate comfort and functionality incorporating upscale luxury designs appealing to LifeStyle-conscious middle and upper middle-income consumers in the U.S., China, Europe, and elsewhere in the world. To learn more about Nova LifeStyle, Inc., please visit our website at www.NovaLifeStyle.com or download the NVFY IRapp from the investor page.

Safe Harbor Statement
All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Nova's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Nova's filings with the Securities and Exchange Commission.

Company Contact:
Investor Relations:
The Equity Group Inc.
In U.S.
Adam Prior, Senior Vice President
+1 (212) 836-9606
aprior@equityny.com

In China
Katherine Yao, Senior Associate
+86-10-6587-6435
kyao@equityny.com